The Trade Facilitation Agreement (TFA) of the World Trade Organisation came into force from Wednesday as two-thirds of its 164 members ratified the deal that was accepted in Bali in December 2013.
From now on, the WTO member countries will ease rules and reduce the cost of doing business by simplifying the administrative and bureaucratic procedures.
The cost and time of transporting goods from one country to another will drop, and as a result, the prices of goods will also fall internationally.
Bangladesh ratified the TFA in October last year.
The deal came into force when Rwanda, Oman, Chad and Jordan submitted their instruments of acceptance to WTO Director-General Roberto Azevêdo, bringing the total number of ratifications over the required threshold of 110, according to the WTO.
The entry into force of this agreement, which seeks to expedite the movement, release and clearance of goods across borders, launches a new phase for trade facilitation reforms all over the world and creates a significant boost for commerce and the multilateral trading system as a whole.
Full implementation of the TFA is forecast to slash members’ trade costs by an average of 14.3 percent, with developing countries having the most to gain, according to a 2015 study carried out by WTO economists.
The agreement is also likely to reduce the time needed to import goods by over a day and a half and to export goods by almost two days, representing a reduction of 47 percent and 91 percent respectively over the current average.
The implementation of the TFA is also expected to help new firms export for the first time. Moreover, once the TFA is implemented, developing countries may increase the number of new products exported by about 20 percent, while least developed countries are likely to see an increase of up to 35 percent, the WTO said.
“This is fantastic news for at least two reasons. First, it shows members’ commitment to the multilateral trading system and that they are following through on the promises made in Bali,” Azevêdo said.
“Second, it means we can now start implementing the agreement, helping to cut trade costs around the world. It also means we can kick start technical assistance work to help poorer countries with implementation.” This would boost global trade by up to 1 trillion dollars each year, with the biggest gains being felt in the poorest countries. The impact will be bigger than the elimination of all existing tariffs around the world, Azevedo said.
A TFA facility was created at the request of developing and least-developed countries to help ensure that they receive the assistance needed to reap the full benefits of the TFA. Developed countries have committed to immediately implement the TFA, which sets out a broad series of trade facilitation reforms, the WTO said. Earlier, the WTO adopted the TFA in its ninth ministerial conference at Bali in Indonesia in December 2013 to simplify trade rules and reduce the cost of doing business worldwide.